Business Plan for

Clients:Ryan Leier

Dustin FrusonKristine Divall

July 3, 2009

KEAS ConsultingAmy BonnerStefanie JelinskiErika KubikKimberlee Maruyama

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Table of Contents

1.0 Executive Summary...................................................................................................................32.0 Introduction to One Yoga..........................................................................................................33.0 The Operations Plan..................................................................................................................34.0 The Human Resources Plan.......................................................................................................35.0 The Marketing Plan...................................................................................................................36.0 The Financial Plan.....................................................................................................................36.0 Summary of the Business Plan..................................................................................................3References........................................................................................................................................3

Appendix I – Location in Saskatoon, Saskatchewan...................................................................3Appendix II – Organizational Structure......................................................................................3Appendix III – Class Schedule....................................................................................................3Appendix IV – SWOT Analysis..................................................................................................3Appendix V – Floor Plan of One Yoga at 1201 9th Street East Saskatoon, Saskatchewan.........3Appendix VI – Capital Budget Excel AttachmentAppendix VII – Operating Expenses Excel AttachmentAppendix VIII – Salaries and Wages Excel AttachmentAppendix IX – Projected Income Statement Excel AttachmentAppendix X – Projected Balance Sheet Excel AttachmentAppendix XI – Projected Cash Flow Statement Excel Attachment

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1.0 Executive Summary

The underlying value at One Yoga is to help others grow. By developing a strong community of yoga practice, where all students are challenged to move beyond impossibility to possibility and from separation to integration One Yoga will facilitate the individual growth that customers seek.

One Yoga’s objective is to raise the required debt and equity financing required to open a new studio in Saskatoon.

One Yoga will employ a differentiation strategy by providing superior and authentic instruction targeting women and men aged 20 to 35 who are educated, community oriented, conscientious individuals focused on overall well-being. By focusing on the core principles of Yoga practice and by minimizing the costly commercial aspects, One Yoga will utilize a high quality low cost strategy.

The yoga practice will be incorporated and the management team will consist of the three equity owners: Dustin Fruson will act as Manager of Accounting and Finance, Ryan Leier will fulfill the role of Manager of Operations and Instruction and Kristine Divall will fulfill the role of Manager of Promotions and Community Liaison. All three owners have previous management experience at the original and successful One Yoga location. An additional 5 instructors will be recruited to fulfill the remaining staffing requirements.

The practice will occupy a beautiful and newly renovated space in the Nutana district of Saskatoon in close proximity to other holistic, sustainable living, and natural food stores such as the Better Good. The studio will be purchased in September 2009, renovated and open for operations November 1, 2009.

Promotional activities will include using a passive marketing strategy to pursue advertisement that is in line with the principles of yoga by not appearing as an overly commercialized yoga provider. Previously, One Yoga has relied on word-of-mouth advertising as its main source of advertising but with the goal of increasing attendance at the new studio increased marketing efforts will be needed to ensure success. One Yoga will maintain their existing affiliation with Lululemon and The Better Good to provide yoga sessions in the community to continue to build community awareness. Furthermore, One Yoga will utilize different mediums consisting of advertisement via their website, advertising using posters at their current studio for openings at the new location and continued reliance on word of mouth.

The financial projections for One Yoga assume that customer attendance will increase by 2% each year. The financial goal of the owner-managers is to earn a 30% return on investment. Based on growth projections, One Yoga will operate at 24% of capacity by 2018.

There are four key success factors for One Yoga which include: Exuding authenticity in the promotion of the practice of yoga Staying close to the customer Providing quality instruction Maintaining customer loyaltyThe success of One Yoga is reliant on providing exceptional and authentic yoga instruction to its customers. By staying in tune to customers needs, One Yoga will build the customer loyalty that will contribute to the success of the studio.

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2.0 Introduction to One Yoga

Background on Client and Business Concept

Yoga has become increasingly popular in the past decade. There have been many accreditation facilities that have enabled avid yoga practitioners to become instructors. Dustin, Ryan, and Kristine have done just that.

Ryan has been practicing and teaching yoga for a number of years; he opened his own studio, One Yoga, three years ago in Saskatoon. The business has grown and now employs 8 instructors, offering up to 3 classes a day with specialty classes on demand and is looking to move to a new studio in Saskatoon.

Two of the other instructors at the original One Yoga studio, Dustin and Kristine, have expressed an interest in partnering with Ryan and expanding the business in the following ways:

(1) into a larger space; and (2) expanding the service offerings to clientele by offering different types of yoga

Objectives

The long term goal of the company is to provide sixty thousand dollars in compensation to owners in the form of salary by the year 2014.

The short term goal of the company is to purchase a larger studio, which offers two rooms, a retail area, and a massage room. The proposed location is 1201 9th Street East (see Appendix I for map of location), which is in the Nutana area near Broadway where a multitude of holistic businesses and people reside and frequent.

Ryan, Kristine and Dustin are planning to purchase the larger studio in September of 2009. Once purchased, renovations are scheduled for September through October, with operations beginning November 1, 2009. The studio will have a year end of December 31 and Dustin, Kristine and Ryan will equally share in the ownership of the company.

Mission Statement

Through the following three elements, One Yoga will facilitate a process of realization and oneness:

Our Teachers: One Yoga is devoted to providing well-trained and genuine teachers, who provide compassionate guidance to students in pursuit of their goals. They are transformational leaders, who live their yoga practice and deliver from a place of authenticity.

Our Community: One Yoga recognizes that healthy communities consist of healthy individuals. The community of One Yoga provides a safe and supportive environment to everyone as they move towards physical, mental and spiritual health. One Yoga and its members leave ‘the mat’ and become agents of positive change and influence within their larger communities.

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Our Environment: One Yoga deeply acknowledges the need to display respect for both the natural and urban environment. By facilitating connections to the earth, One Yoga and its members recognize the diverse beauty of the planet and act with conscientiousness and awareness in response.

Vision Statement

To help others grow. We aim to develop a strong community of yoga practice, where all students are challenged to move beyond impossibility to possibility and from separation to integration.

Core Values

The core values that will help One Yoga achieve their goals are: Inclusivity: All people are capable of experiencing yoga. Practice: Through steady practice one can reach the heights of yoga. Community: A supportive and encouraging environment invites us to open our eyes and look within,

and then return to our communities with increased awareness and compassion. Intention: Genuine, well-defined intentions provide the foundation for action (karma yoga) and

growth.

3.0 The Operations Plan

Changes in the future

Based on demand for certain classes, One Yoga will adapt and add more classes and instructors.

How One Yoga Operates

What service it provides

One Yoga will be providing yoga instruction for onsite as well as offsite classes. Onsite classes will be regularly scheduled with four classes per day Monday through Saturday and 5 classes held on Sundays. Refer to Appendix III for class schedule. The studio will be closed for statutory holidays.

Offsite classes may be either regularly scheduled or special sessions, as requested by groups within the community such as sports teams or corporate groups. One Yoga will provide instruction for up to ten offsite classes per week. For offsite classes, it will be up to the group requesting the offsite classes to provide the facility for these sessions. If needed, One Yoga can suggest a location but it will be up to the group to arrange and pay for the facility.

Legal Structure

One Yoga will be incorporated to allow for increased protection against liability, ease in transfer of ownership as well as to utilize the deferral of taxes through use of the small business deduction on allowable business income.

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Board of Advisors

The board of advisors will consist of the three owners, Dustin (Manager of Accounting and Finance), Ryan (Manager of Operations and Instruction) and Kristine (Manager of promotions and community liaison) who are also the owners of One Yoga.

Organizational Structure – Refer to Appendix II

One Yoga will have a relatively flat organizational structure with three managers and five additional instructors. Each manager will have equal authority, each fulfilling unique roles. Dustin will be the manager of Accounting and Finance, Ryan will be the Manager of Operations and Instruction and Kristine will be the Manager of Promotions and the Community Liaison. There will be eight instructors in total. Of the eight instructors, three of the instructors are also the owner-managers and five additional instructors will be hired to fulfill staffing requirements.

Management

Each of the owner-manager’s are well educated in their respective areas of expertise and are all certified yoga instructors. Dustin has a Bachelor of Commerce degree with a major in entrepreneurship and small business management. Dustin has four years of past business experience and will be able to provide financial oversight when executing business decisions. Ryan has extensive training in Vinyasa and Lyengar styles of yoga, obtained under the instruction of Father Joe Pereira. Ryan will be able to oversee the class structure and will be able to ensure students experience quality instruction and fulfilling practices. Kristine has a Bachelor of Education degree and has roots deeply ingrained in the community. Kristine will use her connections and well developed interpersonal skills to seek new opportunities in the community.

Floor/Site Plan

The proposed studio location is that of a current church. Renovation plans will utilize the existing floor plan (Appendix V) of church while updating it to enhance the functionality of it as a yoga studio. The studio will be a beautiful and calm environment where students will be able to come unwind and prepare mentally for their yoga practice. The two floor building provides the following functionality within the 4,150 square feet of space:

Upper Level: Reception area and lounge area – a calm environment for students to relax while waiting to

check in for a class or for their class to begin. Upon entering the studio, students will be required to sign in and pay (or use one of their pre-purchased passes). Attendance and payments will all be tracked on a computer (this has been factored into the capital expenditures budget).

Merchandise area – situated immediately beside the front desk, students will be able to browse the One Yoga merchandise that is sold (please see the discussion of products below) either while waiting for their class to begin or after class.

Large studio – will hold a maximum of 70 students and will be equipped with radiant heating for Bikram yoga classes. The large studio will have laminate flooring that can be easily washed

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as well as track lighting that will provide soft lighting. The original windows will be kept and this will allow natural light for classes held during the day.

Lower Level: Office area – will be where the managers conduct their administrative tasks. The office will be

equipped with a computer, desk and chairs. The office will also be where the managers hold meetings with prospective students and groups wanting private instruction.

Change rooms – there will be three change rooms for each of the following groups: males, females and staff. The change rooms will have cubby-holes for students to store their belongings. Each change room will have two showers as well as two washroom stalls.

Small studio – will be modeled after the large studio and have a capacity of 20 students. This studio will be used in conjunction with the large studio so as to maximize capacity.

Description of Average Business Day, Week, Month, Year

Refer to Appendix III for class schedule.

Opening and closing hours are 6am and 9pm Monday through Friday, 8am and 9pm on Saturdays and 8am and 6:30pm on Sundays respectively. As the studio is not offering classes all throughout the entire day, the studio will be open for half an hour before each class and for half an hour after each class to allow for instructors and class participants to prepare and wrap up class.

Hourly instructors are paid a fixed compensation of $40 per session instructed and this compensation includes opening and closing the studio.

One Yoga will be open weekdays at 6am to allow for instructor setup and preparation for the 6:30am class. This class is run at this time on weekdays to allow those in the workforce to start their day with an early sixty minute yoga session before heading to work.

The next session is scheduled from 10am to 11:00am on weekdays and is geared towards those stay at home parents or parents with young children who would like to bring their children to class. The instructor for this class is again required to open the studio one half hour prior to class start and will remain at the studio and lock up one half hour after the class finishes.

The two evening classes are scheduled to allow those in school or the workforce to end their day with a yoga session. These classes will offer varied level of instruction throughout the week to cater to beginner, intermediate and advanced levels.

Capacity Limits

Classes are not registered therefore customers attend on a first-come, first-serve basis. There is room for 70 students per class. Based on previous experience, classes are anticipated to run with at an average of 20% capacity.

As there is plenty of space and time available, additional classes can be scheduled if demand exceeds current scheduled capacity.

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Capital Budget – Please see Appendix VI Capital Expenditure Details

Land and BuildingAfter assessing the available real estate in the Nutana area, it has been determined that the best available option for the new studio is a former church located at 1201 9th St East. The location and capacity at this proposed location will allow One Yoga to adequately capture its market. The church is located on a well developed piece of property in a mature neighborhood.

RenovationsRenovations will be done to the church in order to convert it into a useable studio with washrooms, change rooms and office space. The original integrity and design of the church will be preserved as much as possible, but will be renovated so as to use the space as efficiently as possible.

Computer Hardware and SoftwareTwo laptop computers will be purchased as well as the software, Quickbooks Pro. It is anticipated the computers and software will be upgraded after two years. A laptop will be used at the reception desk to track students’ attendance and payment methods (or prepayment status) as well as contact information. The second laptop will be used in the office to carryout administrative and accounting tasks by the managers. The Quickbooks Pro software is meant to be used by a small business to carry out the basic financial and managerial accounting function. A printer/scanner/fax will also be purchased for use in the office.

Furniture and FixturesThe budget for furniture and fixtures will be $7500. Desks and chairs will be purchased for the office and reception area. Students will be able to sit, relax and interact with other members or instructors before or after class. Decorative fixtures will be purchased to enhance the esthetics of the studio.

EquipmentEquipment expenditures will include the purchase of a stereo system, humidifier system as well as telephones. The use of the stereo enhances the students experience and can be used for different workshops held; while the humidifier will be used for Bikram yoga classes.

Working Capital The working capital requirements in the first year is negative but this is based on the fact that the current portion of long term debt is payable within the first year but 2009 will only have 2 months of operations as the studio is not opening until November 2009. As such, One Yoga will be required to pay the current portion over a period extending into 2010 when it is projected that there will be sufficient cash flows available to finance the debt obligation.

Cost of Sales

Cost of sales is immaterial as the sale of merchandise is not part of One Yoga’s core business. All revenue is recorded net for the purposes of this analysis. Please refer to Appendix XII for a breakdown of the cost of each item of merchandise.

Operating Expense – Please see Appendix VII Operating Expenditure Details

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A 10 year projection of the expected operating costs for One Yoga has been prepared in Appendix IX. Notes in the spreadsheet explain how the item is calculated and what it relates to.

Expected annual operating costs begin in 2010 with $226,000 and increased each year for inflation estimated at 3%. The major expenses are as follows:

Amortization: All capital assets will be amortized using the CCA tax rates: Building: Class 1 at 4% Equipment and furniture: Class 8 at 20% Computer Equipment: Class 50 at 55%

Salaries and wages: The staff at One Yoga is essential to providing customers with the quality instruction and aiding in the overall experience of the studio. The three salaried employees will be paid a modest salary in the first year ($3,000/month each) and will increase by 8% annually. The five other instructors will be paid $40 per class taught; both salaried and wage based employees’ remuneration will increase 3% annually for inflation.

Interest on long term debt: The debt service costs are associated with the bank loan attained for $390,000 for the building and the land. The interest rate for the 10 year mortgage is prime + 3%, which is 5.25%.

4.0 The Human Resources Plan

Organizational Structure

Initially, One Yoga will require eight trained instructors. The management team, Ryan, Dustin & Kristine will be salaried instructors and the remaining 5 instructors will be paid on a per class basis. See Appendix II for the organizational structure chart.

Job Descriptions

Manager of Accounting and Finance – Dustin FrusonThis manager should have adequate experience and a general understanding of how to carry out accounting/book-keeping and payroll functions. This manager should be able to prepare monthly financials, interpret financial figures, communicate financial performance to the management team and execute business decisions based on financial analysis.

The daily job description for this manager would include:- Instructing classes- Being available for questions from other class instructors (by cell phone if away from premises)- Reconciling daily sales with cash receipts (deposits should be done often, at a minimum once

per week)

The weekly job description for this manager would include:- Preparing company book-keeping and bank reconciliations- Depositing cash and cheques at the bank- Preparing and authorizing Payroll (signing paychecks / remittance to government)

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The yearly job description for this manager would include:- Compiling financials (could be done through professional accounting firm)- Preparing and filing of tax returns (T2/T4s/T5s)

Manager of Operations and Instruction – Ryan LeierThis manager should be capable of dealing with all human resource tasks as well as the scheduling and structuring of the class offerings.

The daily job description for this manager would include:- Instructing class if scheduled- Being available for questions from other class instructors (by cell phone if away from premises)- Facilitating internal communications among staff- Pursuing on an ongoing basis research into new styles and poses of yoga to incorporate new

poses into the practice- Communicating with students about what they are liking or disliking about the studio in order to

maintain a close connection with the customers’ needs

The weekly/monthly job description for this manager would include:- Ensuring cleanliness standards of facility are maintained- Purchases are made for the studio (yoga mats, cleaning supplies, incense/candles)- Scheduling of classes and instructors

The yearly job description for this manager would include:- Carrying out staff performance review- Managing staffing requirements at all levels

Manager of Promotions and Marketing – Kristine DivallThis manager must have a general understanding of advertising and marketing techniques, they must be well versed and possess effective public relations skills.

The daily job description of a manager would include:- Instructing class if scheduled- Being available for questions from other class instructors (by cell phone if away from premises)

The weekly/monthly job description for this manager would include:- Updating the website- Meeting with prospective community groups interested in One Yoga’s teachings

The yearly job description for this manager would include:- Managing the relationships established in the year and continue to foster meaningful affiliations

Each manager will also be a class instructor; his/her job description also includes duties as discussed under “class instructors” below.

Class InstructorsThe class instructors will be paid on a per class basis unless in a salaried position. The class instructors must have adequate yoga training as well as sports safety training, either through NCCP (National

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Coaching Certificate Program) or through other means of certification. It must be noted that class instructors are not full time employees.

The daily job description of a manager would include:- Instructing class when scheduled- Setting up for class (ensuring the room temperature is adequate and participant spacing is

appropriate)- Greeting and checking in students as they arrive for classes- Collecting sales (including locking cash in safe)- Cleaning studio after each yoga class- Disinfecting mats- Shutting down studio and ensuring premise is locked

The weekly job description would include:- Cleaning of shower/changing facilities

The yearly job description would include:- Receiving additional training (yoga/safety) if required

Training

Training Programs for Class Instructors

It is industry practice that instructors undergo training programs on their own before pursuing positions with yoga studios. As such, it is presumed that One Yoga will be hiring fully qualified instructors. However, One Yoga will benefit from Ryan’s ability to further train yoga instructors. As part of One Yoga’s employee retention strategy, the instructors will be reimbursed up to a maximum of $500 per annum for any training and workshops that they complete. Instructors will also receive a discount for training under Ryan. Annual safety training and re-certification courses will be the responsibility of the class instructors as is common industry practice. The reimbursement should be used to cover both yoga training and safety training expenses.

Training Programs for Management

Management should pursue additional training regarding accounting/bookkeeping functions whenever there is a change in software and also to continually improve upon general accounting/finance knowledge. Management staff should also be required to continually improve in terms of yoga instruction and safety as described above.

Salary & Wage Expense

Please see detail of the salaries and wages in Appendix VIII.

The three owner-mangers will be paid a salary of $3,000 per month in the first year, with an adjustment for inflation in the subsequent years. Although initially this monthly salary appears unreasonable the owners are willing to forego drawing a substantial salary from the business in order to see it succeed in the critical beginning years of the expansion; depending on the success of the business, the salaries will

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be adjusted accordingly. Furthermore, the owner-managers have supplementary sources of income which will support their lifestyle until One Yoga generates sufficient cash flows to compensate the managers at a higher level. Wages will be paid to instructors based on class hours taught. Per class, instructors will earn $40, with an adjustment for inflation as well as an increase in line with that similar to minimum wage in the subsequent years. The new location will be under construction for two months (September and October) and therefore salaries and wages expense in the first year will only be for two months of operations (November and December) and will amount to $24,000. The cost for salaries and wage expense in the following year will be roughly $173,000. The schedule of four classes a day will be implemented immediately after the move to the new studio and will not change into the future. Refer to Appendix III for class schedule example.

Human Resources Strategy

In order to motivate staff, One Yoga will offer free attendance to classes when not instructing. Upward feedback will be actively encouraged so as to empower the instructors and enable them to fulfill their personal goals and visions for the studio (ie. Bringing a new type of yoga or holistic healing to the studio such as ecstatic dance/yoga classes).

Lines of Authority

Please see organizational structure regarding lines of authority in Appendix II. The reporting lines are very informal and upward feedback and communication is encouraged in order to facilitate a continued understanding of customers’ needs. Class instructors will all be under the supervision of the owner-managers.

Shareholder Agreement

A shareholder agreement will be drafted with the following stipulations:- In the event of a share sale, the remaining shareholders will have the first option to purchase

the shares before third parties are considered- In the event of share sale, the value of the shares will be determined through a valuation of the

business as performed by a professional valuator

The shareholder agreement will also detail the salary and dividend policies and will outline duties of the individual shareholders

5.0 The Marketing Plan

Industry Overview – background

According to the Harvard Mental Health Letter1, Yoga and controlled breathing have been proved an effective method to treat stress, anxiety, and depression. A number of studies have also proved that practicing yoga will help improve mood and overall functionality.

1 “Yoga for Anxiety and Depression”. Harvard Mental Health Letter. April 2009.

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There has also been an increased trend in healthy living. This is evident through the government offering tax incentives for child fitness programs. This trend will help One Yoga’s potential for success as there will likely be an increasing demand for products and services that foster healthy living.

In April 2009, it was indicated that Saskatoon is now the fastest growing city in Canada 2. “To indicate Saskatchewan's unprecedented growth fueled by its natural resources such as oil, potash, gold, diamond, coal, uranium and agriculture, over 6,200 job openings were posted on the province's employment portal, SaskJobs.ca.”

The health conscious public coupled with the growth of Saskatoon creates a perfect opportunity for One Yoga to expand their operations. In order to attain an objective view of this proposed business opportunity, a detailed SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis has been prepared in Appendix IV. By combining the identified market opportunities (large target market, few barriers to practice yoga as well as an increasing awareness of its health benefits) and strengths, One Yoga (reputation and degree of expertise among instructors) will mitigate the threats (competition) of the current and future market and any weaknesses (operating at capacity for certain classes) of the business. We believe that the strong business plan of One Yoga will mitigate the risks identified.

Product

The product One Yoga offers is superior and authentic yoga instruction and coaching. One Yoga will offer a supportive and encouraging environment that will allow all students to realize they are capable of experiencing yoga.

Yoga originated in India as a spiritual and physical practice that brought balance and healing to the body and mind. After coming to North America, yoga has become not just a practice but a lifestyle. Yoga is both an art and a science and through practice a student will explore the connection between the body, mind and spirit. Yoga is a unique way to exercise your physical as well as mental self to achieve total wellbeing. By practicing yoga one can rejuvenate the body and the mind. Yoga stretches, strengthens and builds stamina, in addition to improving the functioning of all the vital organs. Using the natural flow of breath, yoga helps individuals realize their potential for holistic self-healing and inner peace.

The type of yoga taught at One Yoga will be a Vinyasa style of yoga. Vinyasa is a term that covers a broad range of yoga classes, but essentially the word Vinyasa means, “breath-synchronized movement”. With Vinyasa yoga, the teacher will instruct the student to move from one pose to the next on an inhale or an exhale breath. This style of yoga typically starts with a series of poses called sun salutations a number of times to warm the body up, the remainder of the class allows for a great deal of variation and will involve a lot of movement not simply active stretching.

Specific Vinyasa styles taught at One Yoga are: Hatha is general term that encompasses many physical types of yoga, but Hatha yoga is

generally a slow-paced and gentle yoga class that will provide a good introduction to the basic yoga poses.

Ashtanga and Power Yoga is a fast-paced more intense style of yoga. A set series of poses is performed, always in the same order. The practice is very physically demanding because of the

2 “Saskatoon Emerges As Fastest Growing City in Canada.” All Headline News. April 6, 2009. www.allheadlinenews.com/articles/7014690196

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constant movement from one pose to the next. Power yoga is based on the flowing style of Ashtanga, but it does not necessarily keep strictly to the set of Ashtanga series of poses.

Bikram/Hot Yoga is done in a heated room. The room is typically at a temperature of 32 – 38 degrees Celsius so naturally students get quite warm and are therefore more flexible. A vigorous yoga session at this temperature promotes sweating which is a natural way for the body to rid itself of toxins.

Other products offered at One Yoga will be yoga related merchandise such as yoga mats, straps, blocks, Bikram yoga towels, water bottles, t-shirts and reusable cloth bags (yoga bag styles as well as grocery bag styles). One Yoga will try to purchase this merchandise from fair trade suppliers in order to act in a socially and environmentally responsible manner which is in line with yoga principles that support sustainable living. When possible One Yoga will purchase locally and all silk screening, printing and production will be done in Saskatoon. All products sold will be conducive with the lifestyle that One Yoga is promoting, a sustainable lifestyle that lets individuals live their life while caring for the environment and everything in it. These products are ancillary to the main operations of the yoga studio and thus inventory costs will be minimal.

Price

The pricing policy One Yoga uses is one that is conducive to an element in their key success factors: customer retention. By charging a reasonable rate for their classes, students will be inclined to attend a greater number of classes as they will be able to more readily justify paying a lower per class to attend. One Yoga is focused on attracting community oriented, educated and conscientious individuals who have a focus on overall wellbeing. One Yoga intends on attracting women and men of all ages; however their target is focused on women and men aged 20-35. Although One Yoga could charge a premium for their classes, they do not intend on doing so as they wishes to maintain this as one of their competitive advantages, authentic service without exploiting the practice of yoga. One Yoga wants to be able to offer quality yoga instruction that can rival that found in any other large urban centre but will charge a rate reasonable considering the size and cost of living in Saskatoon. Pricing the classes at a reasonable level will not exclude anyone who does not have the resources available to allocate towards an activity such as yoga.

Monthly prices for memberships and other services are as follows:

Drop in $126 Pack $6612 Pack $1201 month unlimited $1203 month unlimited $3256 month unlimited $636

Place

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As the April 2008 edition of Western Investor indicated, “Saskatoon became Western Canada’s fastest growing metropolitan area in 2007”3. The growth in Saskatoon over the past year has been phenomenal. The Nutana area and surrounding neighborhoods are the more developed neighborhoods in Saskatoon. The composition of the neighborhoods is a mix of all different demographics: students, young families, mature families and seniors. Urban communities such as Nutana and Varsity View are attracting individuals who are educated, community oriented, conscientious individuals who have a focus on overall wellbeing and sustainable living. One Yoga is choosing to stay in the Nutana area because of the strong sense of community felt at the current location and do not want to sacrifice one of their key success factors, customer loyalty, by moving out of the area. Please refer to Appendix I for a map of the proposed location of the new studio.

One Yoga has chosen this location as it is on a well developed piece of property with ample parking and the cost of the building is reasonable. The size of the building is 2,075 square feet on one level and 2,075 square feet on the second level. The property is zoned for residential usage but it can be re-zoned for educational usage without having to incur the substantial costs of zoning it for commercial use. The proposed site is accessible from all directions and all main thoroughfares. The site also backs onto green space that will provide a green area that can be used if the instructors wish to practice outside on a particular day.

The classes will be taught in the two rooms at the studio as well as at locations throughout the city whenever instructing private, offsite groups. Please see Appendix V for a floor plan of the studio.

The Competitive Environment

There are 5 direct competitors in Saskatoon. These competitors all offer yoga instruction onsite while some offer more than just yoga instruction. The competitors pricing, location and variety of services is illustrated below. It should be noted that there are other many other indirect competitors in the city such as the University of Saskatchewan’s Fitness Centre that offers some yoga instruction. However, the targeted clientele of One Yoga are those yoga customers who are serious about their practice. The facilities that offer drop in classes as say part of a gym membership are not seen as direct competitors as their instructors are typically not trained specifically in yoga practice therefore the quality of the yoga offered at these facilities is inferior and is not evaluated to compete directly with One Yoga.

Studio Price/ 90min Class Services Offered LocationStudio at Oshun House $15.80 Aesthetical spa

providing medical skincare, yoga instruction, weight management sessions and other aesthetic services

912 Idylwyld Drive North

Renew Yoga Fitness Healing

$14.70 Yoga classes onsite and massage therapy

B2-626 Broadway Avenue

Yoga Central $17.30 Yoga classes onsite 3521 8th Street EastYoga Downtown $16.00 Yoga classes onsite and

offsite3-505 23rd Street East

3 www.westerninvestor.com

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JNS Yoga Studio $19.26 Yoga classes onsite 96 33rd Street East

Micro Environment Analysis (Porter’s Five Forces)

Summary: Analysis of the micro environment suggests that the largest threats are from substitute products and threat of entry of new competitors.

1) Bargaining Power of Suppliers Analysis: The key supply for One Yoga is its instructors. However, most instructors only teach

one or two classes a week, therefore if one were to leave, it would not be very difficult to replace him/her. Further, none of the instructors are unionized and the owners of the studio are also instructors so if need be, they could cover the positions until replacements are found.

Conclusion: Overall force from suppliers is low.

2) Bargaining Power of Customers Analysis: Significant purchasing power of customers is not displayed in this industry as

customers are buying individually and therefore, the loss of one customer would not significantly affect the level of sales volume at One Yoga. Customer switching costs are fairly low (unless a customer has signed up for a term membership) which may result in customers leaving the studio if they are unhappy. However, there are plenty of substitute products that are readily available which increases the overall force exerted from this force.

Conclusion: Overall force from customers is moderate.

3) Threat of Substitute Products Analysis: There are a number of substitutes for yoga. For those seeking physical fitness,

substitutes include outdoor exercise such as running, biking, rollerblading, walking, tennis, and countless other activities that are also not very expensive. For those persons seeking mental stimulation, substitutes include, church visits, quiet meditation or other spiritual practices. In addition, switching costs are relatively low however the perceived level of product differentiation varies depending on the goals of the customer.

Conclusion: Overall force from substitute products is high.

4) Threat of Entry of New Competitors Analysis: There are fairly low barriers to entry as the capital investment required for start-up

is fairly low, there are no regulations that would prevent new entrants from competing in the market place and there are relatively low switching costs for customers.

Conclusion: Overall force from threat of new entrants is high.

5) Competitive Rivalry within an Industry Analysis: There are few to no direct yoga competitors who compete aggressively in

Saskatoon. However as the demand for yoga continues to increase as anticipated (Yoga Journal reported that spending on yoga classes and products increased by over 87% from 2004 to 20084) and due to a fairly low barriers to entry, it is anticipated that rivalry in the industry will increase in the future. Competitive rivalry in the industry is moderate as some

4 http://www.yogajournal.com/advertise/press_releases/10

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rivals such as fitness clubs compete aggressively for customers while other sports such as volleyball and basketball do not present intense rivalry.

Conclusion: Overall force from competitive rivalry within the industry is moderate as some players such as fitness clubs advertise and compete aggressively while others exert little to no competitive characteristics.

Promotion

The promotional strategy that One Yoga will apply is a passive promotion strategy, one that is in the spirit of yoga. One Yoga does not want to come across as overly aggressive or competitive as this will detract from the welcoming and inviting connotation associated with the studio. The following marketing channels will be used:

Lululemon Athletica, a store in downtown Saskatoon that specializes in trendy and comfortable athletic wear for women and men, advertises classes on a community events board. Whenever there are free yoga days in the park sponsored by Lululemon, a One Yoga instructor will offer their instruction services. The instructor will be paid out of the advertising budget for instructing this class.

The Better Good, a store in the Broadway business district has formed an affiliation with One Yoga to offer free yoga in the park on Sunday mornings; this pairing will continue to be advertised in the store as well as by offering handbills beside the checkout tills for information.

The One Yoga website, particularly the domain name, “saskatoonyoga.com” provides a great means to reach out to the community and provide information on what One Yoga is all about. The name implies that One Yoga is THE yoga studio in the city to go to. The class schedule can be viewed online as well as the price of classes and teacher biographies.

Other channels will help with publicity such as word of mouth, the sponsorship of community events, hosting events in public areas and the advertising from the sale of One Yoga products (as mentioned in the products section).

The new studio will be advertised at the current location with signs promoting the new location until the grand opening of the new studio occurs at which point the current operations will transition to the new facility. A grand opening event will be held to make students aware of the move to the new studio.

As the promotional strategy is a rather passive one, the costs associated with it will not be exorbitant. It is anticipated that the cost of the grand opening event at the new studio, the printing costs of any posters and handbills handed out and the costs of any One Yoga products given away as promotions will amount to $1500 in the first year, increasing to about $2000 in the subsequent years.

Marketing Strategy

The success of One Yoga is dependent on the execution of their four key success factors (Exuding Authenticity of class offerings, Staying Close to the Customer, Providing Quality Instruction, Maintaining Customer Loyalty) through their product offerings, pricing, place of offering and promotions.

The macro and micro industry was evaluated using Porter’s Five Forces analysis and SWOT analysis, respectively and the biggest threat was determined to be from competitors and substitute products. Although One Yoga cannot eliminate their threats and risks, they can be managed by ensuring students are able to realize the benefits derived from practicing yoga, such as reduced stress, enhanced physical

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fitness and inner peace; this, combined with deep loyalty built on strong customer and community relations will prevent customers from switching studios.

By providing exceptional and authentic yoga instruction to its customers, priced in a way that makes it affordable for students to come on a frequent basis as well as by staying in tune to the students needs and providing them with a sense of community and belonging upon entering the studio, One Yoga will be able to leverage off of their key success factors in order to contribute to the overall success of the studio and combat against the threat of new competitors entering the market.

To combat against the threat of substitute products One Yoga will promote the use of a class pass package. Not only does this provide a slight discount to customers that they will see beneficial, it will increase the switching costs for the customer thereby reducing the threat of substitute products. Students will be less inclined to pursue other fitness alternatives as they will already have a financial investment in their yoga practice.

6.0 The Financial Plan

Financial Goals for Venus Fitness:

1. To earn a return on investment of 30% 2. To earn a profit in the second year of operations

The ten year projected income statement is attached in Appendix IX.

Revenues are based on estimates made in terms of percentage of capacity that the yoga studio will be filled. Note that the larger studio has a capacity of 70 students and the smaller studio has a capacity of 20 students. We have also estimated the “offsite” classes to have a capacity of 30 students. Per the operations above, 28 regular classes will operate in the studio, and 10 classes will operate “offsite” each week.

The capacity percentages were based on current operations and are as follows:Cases Studio OffsiteBase5 20% 50%Best 30% 60%Worst 10% 15%

Note: A modest growth rate of 2% per year was used for all cases

5 Per Dustin Fruson, One Yoga Instructor. June 19, 2009

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For detailed information on the operating and capital budgets, refer to the Operations Plan (Section 3.0). In summary, we expect initial cash outlays to be as follows:

Detailed information on wages, salaries and benefits is located in the Human Resources Plan (Section 4.0). Total salaries, wages and benefits for 2010 (One Yoga’s first full year) are expected to be $163,000. Salaries are expected to grow as the business matures at a rate greater than inflation; see projected income statements for figures.

Capital expenditures are expected to consist of computer software and equipment, a stereo, and furniture and fixtures. Please see detail below:

Note: Computer equipment replacement costs of $3,300 (plus inflation) are expected every three years.

Computer equipment will be classified in CCA class 50 with a 55% rate. Building will be classified in CCA class 1 with a 4% rate.

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Financing Mix/Capital Structure:

The projected financing mix is as follows:

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Ratio Analysis:

The following ratio analysis was conducted to inform investors about the liquidity and leverage positions in the initial start up period. Based on the following chart, the one ratio that would be of particular concern is the current ratio in 2009. However, this ratio is based on the fact that the current portion of long term debt is payable within the first year but 2009 will only have 2 months of operations as the studio is not opening until November 2009. As such, One Yoga will be required to pay the current portion over a period extending into 2010 when it is projected that there will be sufficient cash flows available to finance the debt obligation.

2009 2010 2011Liquidity RatiosCurrent Ratio 0.60 2.35 3.82

Solvency RatiosDebt to Equity 5.69 3.10 2.04

Profitability RatiosReturn on Equity -12% 42% 29%

Conclusion:Goal # 1 : To earn a 30% return on investment

Worst Base Best GoalNegative 34% 159% 30%

The goal of earning a 30% return on investment is attainable in both the base and best case scenarios. In the worst case scenario the return on investment is negative and would not provide the required return on investment.

Goal # 2 :To earn a profit by the second year of operations

Year Worst Base Best

2010 (73,143)

60,611 253,901

Profits in the second year of operations are achievable and sustainable under the current business model using the base case of operations.

ConclusionThe current business model is adequate for attaining the goals stated above. This is mainly due to the fact that One Yoga has little capital expenditures and the studio provides a service and thus there are relatively minimal variable costs and fixed costs are quite low.

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6.0 Summary of the Business Plan

The combination of the increasing focus that Saskatoonians are placing on healthy and holistic lifestyles, the economic boom Saskatchewan is experiencing as well the leadership position One Yoga currently has in the yoga market, One Yoga is in a prime position to succeed. By leveraging off of their strengths, authentic yoga instruction and opportunities, unsaturated yoga instruction market, One Yoga can tackle any threats or risks potentially faced, namely the introduction of competition and substitute products.

One Yoga’s customers are heath conscious individuals looking for a unique and holistic way of achieving mental, spiritual and physical well being. While the practice of yoga is suitable for anyone, One Yoga is targeting women and men aged 20-35, Generation X and Y. One Yoga’s competitive advantage can be maintained if their four key success factors are constantly being factored into the day to day operations of their business: exuding authenticity in the interaction with customers, staying close to the customers’ needs, providing quality instruction and maintaining loyalty. Dustin, Ryan and Kristine have the perfect mix of skills, awareness, passion and energy to take this business to a position that makes the practice of yoga a fundamental component in the community’s life.

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References

“Yoga for Anxiety and Depression”. Harvard Mental Health Letter. April 2009. “Saskatoon Emerges As Fastest Growing City in Canada.” All Headline News. April 6, 2009. www.allheadlinenews.com/articles/7014690196

Western Investor – April 2008. Retrieved July 8, 2008. Websites: http://www.sreda.com/common/uploads/WI_B50B51.pdf

“Yoga in America” The Yoga Journal. February 26, 2008. www.yogajournal.com/advertise/press_releases/10.

Dustin Fruson, One Yoga Instructor. June 19, 2009

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Appendix I – Location in Saskatoon, Saskatchewan

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Proposed location: 1201 9th Street East

Appendix II – Organizational Structure

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Appendix III – Class Schedule

Monday Tuesday Wednesday

Thursday Friday Saturday Sunday

6:30 ~ 7:30 All Levels

All Levels

All Levels All Levels

All Levels

8:00~9:00 All Levels

All Levels

10:00~11:00 All Levels

All Levels

All Levels All Levels

All Levels

All Levels

All Levels

12:00~13:00 All Levels

Karma

15:00~16:00 All Levels

17:00~18:00 All Levels

17:30~18:30 All Levels

Beginners All Levels All Levels

All Levels

19:30~20:30 Masters All Levels

Masters Beginners All Levels

Release

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Appendix IV – SWOT Analysis

Strengths Weaknesses

- Level of instruction offered by One Yoga instructors is exceptional compared to other studios. Instructors have studied and been certified under world renown teachers such as Baron Baptiste and Father Joe Pereira.

- Local reputation in Saskatoon is already well developed with classes being run at capacity

- Little advertising done to date. One Yoga has been able to grow solely via word of mouth

- Capital requirements for expansion costs are not significant compared to other fitness establishments

- One Yoga currently has no accounting function and there are few controls or monitoring of financial success measures making it difficult to determine how to fund expansion or budget for day to day operations

- Current One Yoga studio not equipped to offer traditional “Hot Yoga” forcing hot yoga seekers to find a studio that does

- Current studio is at capacity for certain classes making it difficult to attend which could be a deterrent for some participants

Opportunities Threats

- Little to no barriers to practice yoga. There are very few people who could not participate in the activity which creates a large market and there are no start up costs such as equipment (like you would need in hockey)

- 39% of Saskatoon residents are in the target age group of the studio providing ample opportunity for growth (see stats Canada reference –Erika)

- Tax incentives for fitness activities being introduced by the government (Currently fitness credit for up to $500 per child)

- From 2004 to 2008, the amount spent on yoga practice has increased by 87% (source: taken from Yoga Journal press release- Erika) indicating an increasing trend in yoga practice

- Other yoga studios and fitness establishments in the city are present thereby increasing the competition and substitute products available

- Current yoga participants may lack discretionary income available for fitness due to recessionary conditions in the economy

- There are low barriers to entry at capital costs are minimal which may not prevent other competitors from entering the market.

- Yoga trend may decline if new “trend activity” increases such as boot camps or other martial arts increases

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Appendix V – Floor Plan of One Yoga at 1201 9th Street East Saskatoon, Saskatchewan

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